When your company in Uruguay starts to grow, the time comes to hire your first employee. It is an important milestone: you stop working alone and start building a team. But it also means meeting specific employment, social security and tax obligations that many entrepreneurs underestimate. From registering with BPS to signing the contract and paying employer contributions, each step must be done in order and on time to avoid fines, demands and future problems.

Whether you have set up a company in Uruguay as an SRL, a corporation (SA), an SAS or a sole proprietorship, the obligations when hiring staff are the same. This guide explains the full procedure step by step so you can bring in your first employee correctly and without surprises.

Employer Registration with BPS: The First Mandatory Step

Before hiring anyone, your company must be registered as an employer with the Social Security Bank (BPS). This is mandatory even if you will hire only one person. Without it, you cannot declare the worker or pay the corresponding contributions.

Many companies complete this registration at incorporation (for example, through the “Empresa en el Día” system), and it can also be handled online or through an accountant. You will generally need:

• A notarial certificate of the company’s existence and representation
• The registered articles of association
• The company’s active RUT with DGI
• The legal representative’s identity document
• The completed employer registration

Once registered, the company is identified in BPS’s systems for all payroll declarations and contributions. It is advisable to complete this step before the employment relationship starts, leaving time for any processing.

Registering the Worker: BPS and MTSS

The second step is to register the worker before they start working. In Uruguay, the employer declares the new worker (hiring date, type of contract, working hours, category, pay) in BPS’s systems; this information also feeds the unified payroll records shared with the Ministry of Labour and Social Security (MTSS).

What Information Is Declared?

You must report the type of employment relationship (fixed-term or indefinite), working hours (full or part-time), professional category, gross pay, start date and other relevant data. This registration is mandatory even for short contracts or part-time staff.

The information declared must be consistent with the employment contract and the monthly declarations. Any discrepancy can lead to observations or fines, and the authorities cross-check information between BPS, the MTSS and DGI.

Deadlines and Fines

The worker must be registered before they start. Employing someone without registering them is a serious breach that can lead to fines from BPS and the MTSS, contributions owed with surcharges and labour claims.

The Employment Contract: Drafting, Signing and Records

Once the administrative steps are done, formalise the relationship with a written employment contract. Although Uruguayan law allows verbal contracts, it is always advisable to sign a written document setting out the conditions: working hours, pay, place of work, duties, duration and other relevant aspects.

The contract must respect the legal minimums and, where applicable, the minimum wages and conditions set by the Wage Council (Consejo de Salarios) for the company’s sector. You cannot agree wages below the national minimum or the sector minimum, or conditions below those set by law (annual leave, weekly rest, maternity protection, etc.).

The contract should be signed in duplicate: one copy for the worker and one for the company. It does not generally have to be registered with any body, but it should be kept in the worker’s file together with all supporting documents (pre-employment medical certificate, proof of registration with BPS, payslips, attendance records, etc.).

Trial Periods and Types of Contract

Uruguayan law does not set a general statutory trial period, but trial periods can be agreed in the contract or provided for in collective agreements, and in practice periods of up to three months are common. Keep in mind that for monthly-paid workers the right to severance pay generally arises after 90 days of work. Fixed-term or seasonal contracts are allowed only when the nature of the activity justifies them: misusing them can lead to the contract being treated as indefinite.

Contributions, Payroll and Monthly Obligations

From the month the worker joins, you must declare and pay monthly social security and health contributions and withhold personal income tax (IRPF) where applicable. These are declared to BPS within the monthly deadlines.

The main items are:

• Employer pension contributions: 7.5% of gross pay in the general regime
• Personal contributions: deducted from the worker’s salary (15% for pensions plus health and other items) and paid by the company
• Health insurance (FONASA): an employer contribution (5%) and a personal contribution that depends on salary and family situation
• Other employer items: small contributions to labour funds (FRL, FGCL)
• Workplace accident and occupational disease insurance (BSE): paid by the employer, according to the risk of the activity
• IRPF on employment income: monthly withholding when the salary exceeds the non-taxable threshold

Payroll can be managed through BPS’s online systems or by an accountant using authorised software. Contributions must be paid on time: late payment leads to surcharges, interest and possible enforcement by the authorities. IRPF withheld from salaries is also declared and paid as the rules require.

Other Obligations and Practical Considerations

Beyond registration and monthly obligations, there are other operational aspects to consider when hiring staff. Keep attendance records and an up-to-date file for each worker with all supporting documents.

Occupational health and safety obligations also matter. Depending on the number of staff and the activity, you may need to designate a health and safety officer, carry out periodic medical checks or obtain certain authorisations. These obligations vary by sector, so consult an employment adviser or a safety technician.

Another key aspect is how hiring staff affects your company’s tax structure. If you have been working under Monotributo or another simple structure, hiring employees may require you to change regime (VAT, IRAE) or reconsider which legal structure to choose. Many entrepreneurs who started with a ready-made SAS later review their structure when they scale.

Finally, if you are bringing staff from abroad or hiring non-residents, you will also need to manage the relocation of staff to Uruguay, including immigration procedures, apostilles and tax residency considerations. Professional support is key in those cases.

Frequently Asked Questions

Can I hire someone before registering as an employer with BPS?

No. Employer registration is mandatory before any employment relationship starts. Hiring without it can lead to fines and penalties and to problems when declaring contributions. Complete it in advance.

What happens if I do not register the worker in time?

Employing someone without registering them is a breach that can lead to significant fines from BPS and the MTSS, contributions owed with surcharges and labour inspections. The authorities cross-check information, and the worker can also report the situation.

How much does it cost in total to hire an employee in Uruguay?

It depends on the gross salary, the activity and the worker’s category. Employer contributions in the general regime are around 12.6% of gross pay, plus workplace accident insurance (BSE). On top of that, you must provide for the aguinaldo (an extra month’s salary a year), paid annual leave and vacation pay. Taking everything into account, the total cost is often around a third above the gross salary, so it is essential to calculate it in detail before committing.

Conclusion

Hiring your first employee is a key step in your company’s growth, but it also involves employment, social security and tax obligations you cannot neglect. From BPS registration to monthly contributions and a properly drafted contract, every detail counts to avoid fines and problems with the authorities.

Although you can handle these procedures yourself, it is advisable to have a professional team that knows the Uruguayan employment regime well, advises you on best practices and helps keep your company compliant from day one. At sociedadesanonimas.uy we work with more than 500 companies and offer comprehensive advice on incorporation, procedures and business management, including hiring staff.

Book a consultation with our team for personalised advice on hiring your first employee correctly, optimising your tax structure and meeting all your obligations efficiently. Discover all the types of companies in Uruguay and choose the best way to grow your project.